Europe midday: Stocks fall after disappointing China data

15 September 2021

(Sharecast News) - European stocks had fallen by midday on Wednesday as investors sifted through disappointing Chinese data and the latest UK inflation reading.
The benchmark Stoxx Europe 600 index was down 0.3% at 466.40, Germany's DAX was 0.1% lower at 15,703.48 and France's CAC 40 was 0.5% weaker at 6,621.78.

Data released out of China earlier showed that retail sales growth fell to 2.5% on the year in August, from 8.5% in July, coming in well below consensus expectations of 7.0%. Meanwhile, industrial production growth slowed to 5.3% in August from 6.4% the month before, versus expectations of 5.8%.

Fixed asset investment growth was 8.9% in August, down from 10.3% in July and more or less in line with consensus of 9.0%.

In the UK, figures from the <em>Office for National Statistics</em> showed consumer price inflation saw its biggest increase in August since records began in 1997.

CPI rose to 3.2% from 2% in July, coming in well above the Bank of England's 2% target and consensus expectations of 2.9%.

The ONS said the inflation rate was driven higher by higher food and restaurant prices, but that this is likely to be a temporary change. Eating out at restaurants last month cost more than it did last year, when the government's Eat Out to Help Out scheme was in place.

Closer to home, figures from <em>Eurostat</em> revealed that eurozone industrial production rose by 1.5% month-to-month in July, having declined by an upwardly-revised 0.1% in June and coming in well above consensus expectations for a 0.6% increase.

The year-over-year rate eased to 7.7% from 10.1% in June but was above expectations for 6.3% growth.

<em>ING</em> said: "Eurozone industrial production recovered strongly in July after two months of contraction. As the seasonal adjustment flatters the summer months, it is too soon to dismiss the negative growth impact of supply chain problems."

In equity markets, Swedish fashion retailer <strong>H&amp;M</strong> was in the red after its quarterly sales rose less than expected.

Zara owner <strong>Inditex</strong> was also down, reversing earlier losses despite hailing record sales in the second quarter.

<strong>Swedish Match</strong> rallied after saying it will spin off its US cigar business to shareholders.